2013: Google Leads a Phone Price War

As the technology improves, prices for hardware and services will plummet.

Dramatically Falling Monthly Service Fees

I have just established that if you are a Google (Android, Nexus) customer, your voice and SMS expense could go to zero in 2013. So obviously you're not going to send a check to Verizon ( VZ), AT&T ( T), T-Mobile and Sprint ( S) for services you will not be buying from them.

Now, all you need from the carriers is data. This means that the carriers lose all SMS and voice revenue as such. On an AT&T or Verizon $90 monthly bill, those are $60 out of the $90. What's left is $30, the data revenue.

Did you pay attention here? AT&T and Verizon will lose 67% of their wireless revenue. Capische? Do I have your attention now?

It may actually be even worse than that. T-Mobile already today offers data plus voice and SMS for $30, although only 100 minutes. But by the end of 2013, you can just chuck the SMS and voice pieces from the $30, and you're now at $20 to $25, tops.

Republic Wireless, who is reselling Sprint service, already offers unlimited-everything for $19 per month. FreedomPop, also a Sprint reseller, offers a little bit of cellular data for FREE -- you only pay a $99 one-time payment for the equipment.

I will skip straight to the bottom line here: Google will pressure Sprint and T-Mobile resellers to offer a fat bucket of data -- 5 gig or even 10 gig -- for $19 per month. You get your SMS and calling from Google for free. That's it -- $199 for a Nexus 5 smartphone, plus $19 per month for everything: "Do you hear me now?"

In this radical race to the bottom, the revenue and profitability at AT&T and Verizon in particular will plummet. Apple? Without something to counter Google's cloud services, it could only ride "for free" on the $19/month data -- but voice and SMS would be extra. So an iPhone would probably be at least three times more expensive than and Android Nexus over two years.

That would likely cap Apple's market share, and more likely cause some people to abandon the iPhone in favor of Google Android Nexus.

So there you have it, folks: 2013 will be the year the smartphone pricing fell through the bottom. Google is in the driver's seat in this race, with Sprint and T-Mobile helping along, eagerly seeking to savage AT&T's and Verizon's market shares.